Breaking news from chip giant NVIDIA.
The results are in and beat all expectations.
Welcome to World Business Report from the BBC World Service.
This is Andrew Peach in London.
And I'm Lily Dramali in San Francisco where I'm reporting on NVIDIA's results.
A referendum on whether we are in an AI boom or not.
Also today why the Dutch government has had second thoughts about taking control of a Chinese computer chip firm.
And Head of the Ashes will ask why the growth in cricket favours shorter forms of the sport.
We'll start, though, with these results from NVIDIA in the last few minutes.
Quarterly revenues of $57 billion... up 62% on a year ago.
So, with names like Amazon, Meta and Microsoft all planning to spend heavily on Nvidia's AI chips, the world's most valuable company is expecting sales to hit 65 billion over the quarter.
Investors have been questioning whether these huge sums being poured into AI will ever pay off, but For the moment, NVIDIA continues to stand out.
There's so much to talk about here.
Let's get started with our guests.
Heenal Patel is head of research at RoboCAP Asset Management, a company that holds shares in NVIDIA.
He's in London.
Susan Smith is portfolio manager at Exchange Capital Resources.
She's in Chicago, first to San Francisco.
And my colleague, North America tech correspondent, Lily Jamali.
What do you make of it, Lily?
Well, I think investors who want to see a boom will see a boom.
And those who see some fractures are going to kind of continue with their drumbeat that there is a bubble that we're in right now.
And I think, you know, it kind of looks at it really depends on whose lens you're looking through.
These numbers are impressive. beat analyst expectations as well.
So on the surface, things look great.
But at the same time, we're coming off the back of a couple of really significant deals that NVIDIA has struck with, the likes of Anthropic OpenAI and XAI, Elon Musk's AI developer.
And the question becomes is NVIDIA, you know, sort of making these investments so that that money comes back to them?
That is a red flag for a lot of investors and something that continues to be the talk of Silicon Valley, even after these results have come out.
So that's interesting because in recent days, recent weeks, the market was judging that things had got a bit frothy around NVIDIA.
That's not what the numbers say, but you think they might still think that?
Yeah.
I mean, listen, I find that it tends to be somewhat generational.
People who have lived through the dot-com era and some of the other bubbles that the tech industry has experienced in recent decades are have that experience.
And that's the lens through which they try to understand this moment that we are in.
They see those deals that I talked about, which are sometimes referred to as circular financing or vendor financing, and see that as a red flag.
On the other hand, even some of those same people will tell you that this technology is absolutely generationally, a life changer.
It's a game changer for every person.
It will change the way we work.
It will change the way we live.
So I think there's scepticism, but also an understanding that, even if we're in a bubble and that bubble bursts, life is going to be different on the other side.
Stay with us, Lily.
I want to bring in Heenal Patel, who's running a company that holds shares in NVIDIA.
Does that mean you're celebrating tonight, Heenal?
Well, we've been celebrating NVIDIA's success for the last eight or nine years.
We've actually held NVIDIA since 2017.
So, yes, another quarter of success for us and for them.
Were you confident that that's the story we'd be telling on the programme today?
Because the market seems to have expected otherwise.
No, we were pretty confident about the results and the outlook, more importantly.
All of our channel checks, all of our discussions with companies, both customers peers, competitors to NVIDIA the direction of news is the same.
We need to build a load of this stuff, AI infrastructure infrastructure.
I think one thing that people forget is that everyone's looking at an AI model as it is today.
But this infrastructure, some of this infrastructure won't be ready for another five to ten years.
And by then you'll have ChatGPT 10 or 15.
And God knows how much better it will be than today's versions of ChatGPT, which are already remarkable for many people.
We see the demand being very strong.
We see the outlook very strong.
We see the software just getting better and better every year.
So you think this is sustainable?
It's basically a boom, but not a bubble that's about to burst anytime soon.
Well, look, I mean, Jensen is always quite bullish about the end market.
I think on today's call so far, they came out with a very interesting number, which is they expect around 4 trillion of AI infrastructure spending by the end of the decade.
By my calculations, that means that NVIDIA is well on its way to over a trillion dollars of annual revenue, if they're correct, obviously.
So yeah, I mean, if they are correct and let's face it, if any one company in the world can see exactly what's going on across the spectrum of AI demand, it's NVIDIA.
And they're calling out this number.
So we have no reason to doubt them.
Heenal, stay there.
Back to Lily Jamali in San Francisco.
Heenal mentioned Jensen, Jensen Wang, the chief executive.
We should say he's at this US-Saudi investment forum in Washington rather than at some kind of party.
That's correct.
And you often see Jensen Wang by Donald Trump's side in recent months, whether he's in Washington or in London and other places.
He really has been taken on the role of, I think, Silicon Valley's most important diplomat, both for the tech industry writ large, which has sometimes had a very rocky relationship with this president, but also for his company.
So what we're seeing today is Nvidia agreeing to provide Saudi Arabia's Humane with some of its chips.
This feeds into a narrative around sovereign AI, which is another sort of talking point here in Silicon Valley about how other countries really for their own national security should build their own data centers and sort of center their culture when AI development is happening within their borders.
Saudi Arabia is a tricky one because of its human rights record.
And I think there is a lot of concern.
We're hearing a lot of talk about Jamal Khashoggi and the obviously murder of this journalist that the CIA says was at the hands of the Saudi government.
This concern about, you know, does it make sense to do business with a government like that?
This government in the United States, the Trump administration is looking past that.
And I think a lot of members of the tech industry are as well.
Let's bring in Susan now.
Susan Schmidt in Chicago from Exchange Capital Resources.
Susan, let's look at the immediate reaction to these numbers.
The last time I looked, Nvidia shares were up 4%.
Definitely positive.
So still, you know, up in the aftermarket hours.
I think this news is being received quite well by investors.
And they needed a positive reinforcement for the bulls to stay involved and we've seen that weakening and that concern that is this AI sector overvalued.
NVIDIA has been the flagship company representing that trend.
And so to see these numbers come out today and Jensen Huang, CEO of NVIDIA, always very positive, but particularly positive today.
Investors are looking at this beats of results and surpassing estimates.
And I think that really is going to give some support and comfort to the that generation of investors that wants to believe in this AI trend and that valuations can hold at these levels.
Give me some context on this, Susan, because this company is so big.
It affects the whole of the US economy and pretty much every stock market around the world.
So the ramifications of this news, and perhaps, perhaps Even more significantly, the ramifications that could have been if the news had been worse for NVIDIA today, are massive.
They are.
The ripples that will happen as a result of this announcement have a lot of breadth to them.
They can reach far-flung places because NVIDIA has become so prevalent in discussions about AI.
The company is so large.
Its sales are everywhere.
I think this becomes a really important, and that's why you see the market focus on it so, so much.
And so you have days like today nvidia is the news.
We're not talking about the fed minutes, we're not worried about what the labor stats are.
We're worried about nvidia, and it just shows you how much focus investors are putting on what this company is doing.
Now we're sort of over the summit of this moment.
Um, does that mean it calms down a bit now?
Do you think even you know if we are heading for some kind of ai bubble bursting in the future?
It's not going to happen like tomorrow.
I don't think it happens tomorrow, but with the market you never say never.
But I do think that this news is going to add a level of comfort to investors who were getting nervous about the AI bubble.
I think most important was that this news came out positive.
If it had been negative, we'd have a very different conversation.
I think the ramifications of it being positive are that investors can maintain some level of confidence and security in moving with that AI trend, seeing it continue to grow.
And they can debate the merits of, is the valuation exact?
But overall, they want to see that that trend is continuing.
And that's what NVIDIA's results showed.
Heenor Patel, investor, you feeling comforted?
Yeah, definitely.
The numbers speak for themselves.
The commentary is very positive.
The demand is off the charts, as a gentleman would say.
And you know, What we see in the future of NVIDIA is more demand, not just from LLMs, but from physical AI.
So what people don't always understand is that these data centers aren't just doing, you know.
Chat to EBT.
They're training the next generation of autonomous vehicle.
They're training robots that could potentially help elderly folk in their own homes.
This data center capacity that's being put down is going to be multimodal and will change a lot of different industries in the next 10 to 15 years.
And Lily Jamali in San Francisco, let me ask you this.
Who is this bad news for?
Hmm.
Great question.
Who is this bad news for?
I think, for the time being, it's those skeptics that I mentioned earlier, the people who are saying there is a bubble, it's going to burst and it's going to be really bad.
You know, they're going to have a little bit of egg on their face tonight anyway.
But, you know, one thing I do want to mention about NVIDIA is for the time being, they have demand issues. really helping them out here there's just insatiable demand and i hear that with every ceo that i sit down with including sam altman who i got to speak with last month there is just insatiable demand for compute for chips for ai infrastructure and i will just kind of remind folks that you know that demand doesn't it's not going to last forever at a certain point supply will meet it And I think when that starts to happen, when growth starts to slow, that's when things are going to change for Nvidia.
And we're already seeing some analysts flagging that as a concern that this kind of demand just cannot sustain for the foreseeable future.
Is there a lid on capacity as well?
You know the demand is one side of things, but is there a point whereby you just can't make any more of the things?
Yeah, absolutely.
And there are.
I mean there are also constraints like electricity and water, which are all part of the picture.
So there's a whole host of constraints that I think do ultimately help NVIDIA in the short term.
But you know, I think you know the worst case scenario for a lot of folks is five, 10 years from now.
You and I are talking and we're talking about how there's just a you sprinkled across the United States and the UK and other parts of the world.
On the flip side of that, you think about the history of the internet.
We saw the dot-com era.
And the bubble there burst.
But the infrastructure that was built there, even if it wasn't needed right away, did end up helping build the internet as we know it today.
It just took a couple of years.
I'm looking forward to us still doing this in several years from now, Lily.
Thank you very much indeed for that.
Lily Jamali in San Francisco.
Thanks also to Heenal Patel in London.
And we've got more coming up with Susan Smith in Chicago.
If you can stay with us a bit longer, Susan.
This is World Business Report with Andrew Peach here on the BBC World Service.
Now to other stories.
Two months ago, the Dutch government seized control of Nexperia.
That's also a computer chip company based in the Netherlands, but owned by a Chinese firm.
The aim was to safeguard the European supply of semiconductors used in cars and various other electronic devices.
Now the Dutch government has suspended that intervention after what were described as constructive talks with Beijing.
This comes out as a new report from AidData shows that Chinese investment has been flowing into wealthy countries, as well as developing nations buying up assets in the US Europe, the Middle East, Australia.
Dr. Brad Parks is AidData's executive director.
We talked first about the Dutch government and Nexperia.
I view it as a tacit acknowledgement of seller's remorse.
Dutch regulators previously let a Chinese company come in and buy a domestic semiconductor company, and now they're looking back at that regulatory approval and questioning its wisdom.
What's not very widely known is that the original acquisition was done with support from a Chinese loan and highlights just the importance of better understanding this very secretive acquisition lending portfolio that Beijing has been using.
So in this case, the Dutch government is thinking, perhaps we shouldn't have done that.
On the other hand, their intervention has just led to a gumming up of the supply chain of the semiconductors needed to make vehicles.
Yeah, it's a real mess.
Undoing these types of transactions... is not as simple as waving a magic wand, right?
I mean, there's a lot of interlocking pieces and dependencies.
Let's talk more broadly about what your aid data report shows, about China wanting to spend money in many different ways, lending money all over the place.
What's going on?
So the overseas lending portfolio is much larger than Anyone previously understood.
It's worth about 21 trillion.
There's 179 countries that are borrowing money from Chinese state-owned creditors, but only about 20 of the lending is for Belt and Road infrastructure projects in the developing world.
You know, everybody kind of previously assumed that China's lending to wealthy industrialized countries was small and insignificant.
But we discovered really that the opposite is true, that the share of Beijing's lending portfolio that supports high-income countries and upper-middle-income countries, it has just skyrocketed from 12 to 76.
I was frankly stunned to learn that Beijing has bankrolled roughly 10000 projects and activities in high-income countries to the tune of nearly a trillion dollars.
That's so interesting because, as you rightly say, the reporting of this has very much been focused on China investing in lower-income countries, particularly in infrastructure.
You can see why that might be appealing.
What sort of sectors is China investing in in countries where there's more wealth?
In G7 countries, in OECD countries.
They are allowing Chinese state-owned creditors to finance the construction of critical infrastructure assets within their own jurisdictions.
So power plants in the UK, data centres in the US, oil and gas terminals in Canada, seaports in Israel and the United Arab Emirates and Greece.
At the same time, they're using these loans to support Chinese companies that want to take possession of critical minerals and technology assets, with the financial backing of Beijing's state.
So they're using these loans to snatch up rare earth elements semiconductors, both of which are used in fighter jets submarines, precision guided munitions, radar systems, 6G telecom networks.
This is really a source of state credit that is enabling Chinese companies to help the state win the future.
Is it too late to do anything about it?
Because I suppose this is what we're seeing playing out in the Netherlands.
If they're suddenly disquiet about this kind of thing, unpicking it becomes very difficult.
I don't think it's too late.
I think that regulators are a step behind China.
And this is a global game of cat and mouse.
And Chinese companies are constantly trying to find innovative ways to circumvent regulatory barriers to entry.
So they're getting more sophisticated.
They're funneling money through offshore shell companies.
They're running money through international banking syndicates.
They are not knocking on the front door and saying, hey, it's China.
We want to walk in.
They're coming in through the back door in a more surreptitious way.
So regulators really need to up their game.
It's Dr. Brad Parks from AidData.
You can hear more about China's spending around the world in the documentary.
If you look for that, wherever you get your BBC podcasts, this one's called China's Global Spending Spree.
We recommend it to you.
Let's talk a bit more about what's happening today now with Susan.
Susan Schmidt from Portfolio Exchange Capital Resources in Chicago.
Susan, let's talk about Some new info we've got about the last meeting of the Fed.
What do we know?
So the last meeting of the Fed minutes were released today and investors are piecing through those minutes of the meeting, but it hasn't given them any new information.
So we know that we're still very uncertain as to what the Fed will do as we move into that December meeting.
Investors are 50-50, with expectations that the Fed will either lower interest rates by a quarter of a percent or hold them steady.
Those minutes show that the discussion in the last meeting showed that the Fed board was torn within the board.
Half of the members thought, well, perhaps hold it steady.
Half of the members thought perhaps a decreased investor sentiment is echoing that split.
President Trump was really publicly campaigning for interest rate reductions.
He's gone quiet on this, as far as I can tell.
He's been quiet on this topic recently.
And certainly, I'm sure he'll have more comments if we go back to focusing on the economy.
The president and the Trump administration has been quite concerned that interest rates were holding back the economy in the US.
Remember, though, that for the Fed, they have two goals.
They're meant to maintain healthy levels of employment and combat inflation.
Unfortunately, those are two different things and they both have different directions when using the interest rates to help conquer them.
You lower interest rates to boost labor.
You increase interest rates to cap down inflation.
So the Fed's really stuck in the middle trying to figure out what to do.
Having the US government shut down with no data after the last 40 plus days doesn't help either.
Got some new data about US jobs today.
We have US jobs data coming out tomorrow.
And so now investors are anticipating that tonight.
We're expecting that we'll get a little more data.
But remember that that data is still old.
We'll be getting September data tomorrow about the U.S. jobs, but that's September data.
Normally at this time, we'd be thinking about seeing October data.
So investors are still leery of the data that's coming out.
Even when they get the news, it will be questionable how much value it will be bringing, because investors are seeing this as a shifting landscape right now, as the consumers feel potentially the pinch of a tougher economy and we move into the holiday spending period.
Susan, thank you.
Susan Schmidt talking through lots and lots going on today in the US with us from Chicago.
Now, if you're a cricket fan, you'll know that the ashes, the competition between England and Australia starts at the end of the week.
With matches that can last five days, it still draws in revenue.
But the big growth in cricket comes from a much shorter form of the sport, T20.
The Indian Premier League, the IPL, recently valued at $18.5 billion.
So...
Is the sport changing irreversibly?
My colleague Will Bain has been finding out for us.
Cricket.
A gentleman's game.
But not when it comes to the action.
England versus Australia returns to TV screens this week for one of cricket's fiercest rivalries and, as a result, one of its biggest marketing hooks.
And whilst this series has reportedly raked in tens of millions of dollars in TV revenue, the pop for rights for that type of cricket globally is drying up and dwarfed by the shorter T20 version of cricket, which is all over in a few hours.
India's Premier League leads the way in that market and was watched by more than a billion households earlier this year for its latest annual competition.
Streaming and TV rights for the next five years have been sold for a record $6 billion.
Hi, I'm Prakash Wakankar and I love cricket in every form and I've spent the last 20-odd years been blessed to be able to work with the BBC across its multiple platforms.
Prakash Wakankar explained more about about the IPL's explosive economic growth.
What the IPL did in 2008 when it began with a huge amount of fanfare and razzmatazz, is it brought Bollywood front and centre.
It brought music parties entertainment, clothing and colours and designs of playing kits which had never been seen in India before.
And the way it was marketed as an evening out for the family.
So it became an entertaining evening. with cricket as its ostensible centrepiece.
The IPL's success has seen a whole circuit of short-form, franchise-based leagues spring up around the world, from Australia to the Caribbean and South Africa.
And as that supply of more and more cricket has spread, so demand for those longer test matches has waned.
It raises a question that perhaps goes beyond cricket, and in fact sport, to the TV streaming content wars that, of course, propel all of this more broadly.
When is less more?
South Africa has already come up with an interesting answer to that.
Its men's team won't play a long-form test match in South Africa for the next 18 months.
ESPN Cricket Info explain more.
Hosting test cricket is really expensive.
It can cost hundreds of thousands of dollars, which is massive amounts of money.
You know you're paying for hotel accommodation, flights for the opposition team, the actual facility and then all the costs that come with the broadcasting, hosting and so on.
Of course, you do get broadcast fees.
But the South African reality is that they only make money from the broadcasters if they are hosting England, India and, to a tiny extent, Australia.
So hosting all the other teams doesn't make them any money at all. it costs them money.
And so they've got to weigh up, are we willing to spend money on hosting teams?
That's why we've only seen two test series in South Africa for the whole of the last cycle.
It saves you money to just play two tests.
So how important is the England-Australia test series off the field for the global game?
Russell James is a former head of marketing at the governing body.
The England and Wales Cricket Board now runs his own sponsorship consulting firm, Baz Ball as consultant.
I think in the context of English cricket and English audiences, the Ashes in particular is by far and away the most dominant cricket product, or brand, sub-brand or whatever word you want to use within cricket, much more than the IPL was within this country.
If we go back to 2023, the linkage between the Ashes, starting at the popularity of the Vitality Blast domestic competition.
You know we saw significant uptake in both viewership and people going along to those matches as a consequence of the halo that came from the Ashes.
That's Russell James ending that report from Will Bain.
You can hear more if you look for Business Daily, wherever you get your BBC podcasts from.
So just to circle back to the main story breaking in the last hour you'll find much more about this.
We're updating the info all the time at bbc.com. slash news but if you're just joining us nvidia has beaten wall street's expectations for revenue and upcoming sales pouring some cold water on the unsettled markets we've seen in recent times the numbers we've had are that nvidia sales and revenue up 62 percent to 57 billion dollars driven by demand for those chips that are used in data centers sales are up but people are queuing up to buy these things and the chip makers results are likely to calm the markets down a little bit more at bbc.com slash news from me andrew peach and the world business report team thank you for being with us
